5 things to know about digital wallets

Thanks to the e-commerce boom, products can now reach a much wider audience, even in tier 2 and 3 citiesHitesh Raj Bhagat&Karan Bajaj | November 17, 2016, 10:36 IST

The shift towards digital payments in card parties is significant because cash ruled the roost on such occasions.Digital wallets are the obvious gainers with this move. However, as e-wallets gear up to accept more users and transactions, they're also adding many new services into the ambit.

Accept payments instantly

If you're a small business owner, you can actually start accepting digital payments within a few minutes. What's more you don't need any additional equipment like card scanners or computers. All you have to do is sign up with your mobile number. You can also print out a page (most digital wallets will give you this option) with your mobile number and a code. A customer that walks in only needs to have the mobile wallet app installed on their phone. They can just point their phone at your print, enter the amount and send a payment to you. As a merchant, you'll get an instant notification of received funds.

Your payments bank

Paytm, one of the most popular digital wallets, actually has a license from the RBI for a payments bank. Without your KYC documents, a user is limited to Rs 10,000 worth of transactions per month - just update your KYC documents and that limit gets lifted. This means that you culd soon start seeing bank-like services from Paytm such as digital transfers between accounts, credit/debit cards and even proper savings accounts with various digital enhancements.

Transfer to bank account

Paytm has taken the lead here, especially useful considering the recent demonetisation. If you're accepting payments using Paytm, you can just add the money to your bank account digitally - Paytm will deduct 1% of the total as a fee. This is significantly lower than the 2.5% or 3% that is usually charged. This is available for all existing customers, whether they are KYC compliant or not (obviously, the Rs 10,000 cap for non-KYC compliant customers remains). Another small catch (for security reasons) is that any new Paytm customer will have to wait 3 days to transfer any Paytm balance to a bank account. If a new customer decides to provide all KYC documents, even the 3 day wait period is waived.

Wallets on delivery

Thanks to the e-commerce boom, products can reach a much wider audience, even in tier 2 and 3 cities where there may not be as many physical stores. However, cash on delivery remains one of the most popular ways to pay for multiple reasons. With the demonetisation, most online sellers have had to temporarily discontinue cash on delivery, simply because they couldn't legally accept the old notes. However, a customer with a digital wallet can still pay instantly when an item is being delivered. This could work in different ways: with a scanned code or a PIN being sent to the customer's phone. In fact, Freecharge is already offering this with Snapdeal.

Find something Nearby

After the demonetisation, many people found themselves in the unfortunate situation of being completely cashless. But this is something all digital wallets can easily do: suggest where you can go based on your current location. Paytm now offers the Nearby feature which allows you to search for Paytm-enabled stores. As a customer, you can scan through lakhs of registered Paytm sellers and filter them according to distance and category of service. This is obviously win-win as it also helps with discovery and drives more traffic to Paytm sellers, prompting more sellers to sign up in the first place.

There are a number of people who do not have access to a bank account. Some may not have online banking enabled and still others are just not comfortable using cards to transact online. For such people, a simple solution is to get a virtual card (this can also be made by a family member or friend). A virtual card is like a debit card with a preset spending limit - you can load an amount on it and then give the details to anyone for spending.

HDFC, Kotak Mahindra and SBI let you create one directly from your account. ICICI and Axis banks also offer a virtual card service if you use their wallet apps. The card can be used on any online retailer that supports creditdebit card payments. Keep in mind that Virtual cards typically have an expiration date (or are valid for a limited number of transactions).

No cash? You can eat/buy now, pay later with Simpl

Simpl is a recently launched app that works with multiple retailers including Bookmyshow, Fassos, Freshmenu, Zipgo, Zimmber and so on. You need to install the Simpl app on your smartphone and register for an account. When you make any purchase from a supported vendor, you just need to select Simpl as a payment method and you can finish your purchase - you don't need to enter card details or wait for an OTP.

All of your bills are collected in your Simpl account and you need to make payments for those on the 1st and 16th of every month. This saves you the hassle of entering bank details at each merchant every time you do a transaction. As there is nothing going out of your pocket at the time of purchase, you don't have to worry about refunds also in the case of cancellations.